"He's told me there won't be a decision this year about it, he'd be very embarrassed if there was, and I have to take him at his word," Mr Weatherill said.

Australian Industry Group chief executive Innes Willox said businesses had been relying on the undertakings previously given.

"Companies have acted in good faith," he said.

"There's been a long-held belief and signals from governments of both sides that submarines would be built in Australia, and they've made investment decisions around that.

"There's already been some expectation within industry that there would be a role."

He said the speculation was adding another wave of pressure to the industry.

"Industry would be looking for guidance as soon as possible from the Government around what it should expect and what role it will be asked to play. The sooner we can get some clarity around that, the better," he said.

Submarines likely to be built in Japan: analyst

Senior analyst with the Australian Strategic Policy Institute Andrew Davies said the Government appeared to be seriously looking at buying Japanese submarines.

"I think what we're likely to see is a submarine where the hulls and many of the propulsion systems are built in Japan, then it comes to Australia for the final assembly and inclusion of things like the weapons systems and combat systems," he said.

"So I think we'll end up integrating them into a Japanese-built hull.

I think what we're likely to see is a submarine where the hulls and many of the propulsion systems are built in Japan then it comes to Australia for the final assembly.

Andrew Davies, senior analyst with the Australian Strategic Policy Institute

"It is not necessarily the money, it is the fact the Japanese have the large submarine that on paper at least meets some of our requirements.

"And also it's a submarine that could come off an existing production line and therefore be delivered fairly quickly. They're probably the factors that are weighing more heavily."

Mr Davies confirmed the Australian Industry Group's concerns that the contract with Japan would have significant implications for jobs.

"There is no doubt that a submarine designed and built from the ground up in Australia would have more work for local suppliers than one where we take a partially built Japanese submarine and finish it here," he said.

"Any Australian submarine is going to have to be supported here in Australia and for the 30 years of its lifetime or however long we keep them in service.

"So there'll certainly be ongoing work here in Australia but certainly less than if we designed and built a submarine from scratch," he said.

Labor leader Bill Shorten will visit shipbuilding workers at the Australian Submarine Corporation in Adelaide today to reinforce his message that not building the submarines in Adelaide would be a broken promise.

South Australian state Liberal MP Mitch Williams said if the vessels could be bought more cheaply overseas, that could justify not building them in his home state.

"Do we spend the money willy-nilly or do we be more strategic and say look we can I guess get two wins here - we can buy the submarines for a particular purpose for the nation's defence and have a whole bucket of money we can spend on something else," Mr Williams said.